Ethereum (ETH) VS Algorand (ALGO)

Ethereum is the second biggest cryptocurrency after Bitcoin. It’s gotten some serious traction over the past year or so, making it an ideal cryptocurrency to compare with other ones. This article will give you a comprehensive comparison between Ethereum and Algorand.

History

Ethereum

Ethereum arrived on the crypto scene in 2015 through the vision and industriousness of Vitalik Buterin. Buterin envisioned creating a blockchain network that could be used for more than just functioning as a payment system.

After creating a whitepaper and pitching the idea at a crypto event, Buterin launched a crowdfunding campaign in 2014, with Ethereum being made available to the public in the following year.

Algorand

Algorand was founded by Massachusetts Institute of Technology Professor Silvio Micali in 2017. The platform itself was designed by an internationally recognized team of researchers, cryptographers, mathematicians, and economists, from the principles of true decentralization, security, and scalability.

Micali has been a cryptography leader since the 1980s and formed Algorand upon seeing an opportunity to fulfill the promise of blockchain in society.

 

What Are They, And Why Were They Created?

Ethereum

Ethereum is a peer-to-peer blockchain that uses a proof-of-work consensus mechanism. Additionally, it’s an open-source smart contract platform. Smart contracts are programs stored on the blockchain that only run under predetermined conditions.

Apart from facilitating crypto trading, Ethereum was created to help developers deploy decentralized applications (dApps). This links to the Ethereum Foundation, which is a non-profit organization geared towards assisting new blockchain developers and promoting dApps.

Algorand

Algorand is a cryptocurrency and blockchain that can finalize transactions immediately. It uses a proof-of-stake consensus mechanism, and its native currency is the ALGO. The Algorand blockchain also uses Algorand Standard Asset technology that enables the creation of tokens.

Algorand aims to make new developer onboarding easier by reducing technological barriers and getting rid of the advanced requirements for smart contract programming. This also entails reducing gas fees.

Algorand’s protocol was created to enable global open access to financial services that use the blockchain’s structure to improve the financial sector.

 

Price History

Ethereum

At the time of writing, Ethereum is considered to be relatively high in terms of its volatility, with Mondays being the most volatile day and Saturdays being the least. It’s currently priced at $1,280.77 per Ethereum token, down around 73 percent from its 2021 high of $4,878.26 per token. Its all-time low came in 2015 when one Ethereum token cost $0.432979.

Algorand

At present, an Algorand ALGO costs $0.226642. It had an all-time high of $3.56 in 2019 and was at its lowest in 2020 when the Algorand ALGO was priced at $0.105336. The Algorand ALGO is said to be moderately volatile, meaning it has moderate price swings and is relatively protected from manipulation.

 

Market Cap

Ethereum

With a market cap of $154 billion, Ethereum is ranked in the second position in terms of market cap and has a market cap dominance of 17.26 percent. These statistics are also at the time of writing.

Algorand

At the time of writing, Algorand has a market cap of $1.6B and a market cap dominance of 0.18 percent. This leaves Algorand ranked in the 32nd position in terms of market cap.

 

Daily Transactions

Ethereum

At the time of writing, the Ethereum blockchain processes around 1 million transactions daily. For the sake of comparison, its daily transactions peaked on May 9th, 2021, when there were 1.7 million transactions processed on that day.

Algorand

In 2020, Algorand was averaging around 500 000 transactions a day. In 2022, that number has increased significantly, with the platform processing an average of 1 million transactions daily. Algorand reached 4.96 million transactions in January of 2022.

 

Block Size

Ethereum

Ethereum’s block size limit is its block gas limit. Ethereum blocks have a limit of 30 million units of gas.

Algorand

After Algorand’s 3.9 upgrades, its block size was increased to 5 mebibytes.

 

Similarities

• Both platforms leverage and execute smart contracts
• Both platforms operate on their own blockchain.
• Ethereum and Algorand offer infrastructure to allow the creation of blockchain-based applications
• Ethereum and Algorand ALGO can both be purchased via major crypto trading platforms

 

Differences

• Algorand can’t be mined, whereas mining Ethereum used to be possible.
• Algorand has a much larger total circulating supply than Ethereum.
• Ethereum is priced much higher than Algorand.

 

Risks

Ethereum

While Ethereum presents most of the risks you’d expect with a digital currency, blockchain users have cited the risks associated with the “Merge,” an upgrade of the Ethereum blockchain tech. Users and analysts mention the threat to decentralization, risk from an Eth proof of work fork, and technical risks.

It’s all quite technical, but the risk primarily relates to how structural changes will affect functioning and security.

Algorand

Opinions are relatively divided when it comes to how risky of an investment Algorand is. Some analysts and investors state that Algorand is risky, whereas others state that it bares very little risk.

Those who state that it’s safe cite Algorand’s usage of a permissionless pure proof-of-stake blockchain protocol. While this may add some degree of security, it’s still important to exercise caution when investing in any crypto asset.

 

Where to Buy

Ethereum

Buying Ethereum is generally a painless task. Most major crypto trading platforms support Ethereum, so it’s usually a matter of ensuring that the platform is available in your country:

• Kraken
• Coinbase
• Binance
• Crypto.com
• Bybit
• Bitfinex
• OKX
• Bitstamp
• Gemini
• Robinhood

Algorand

Algorand isn’t as widely available as Ethereum. However, it can still be found on most of the platforms that you’d find Ethereum on. Here are a few examples:

• Coinmama
• OKX
• Kraken
• KuCoin
• Easy Crypto
• Coinbase
• Binance

 

Exchanging Ethereum for Algorand

Besides being able to buy both with fiat currency, crypto users can easily exchange Ethereum for Algorand ALGO. Doing this is a simple matter of finding a trading platform that supports the trading pair. Platforms such as ChangeNOW, SimpleSwap, CoinCodex, and HitBTC all allow you to exchange Ethereum users to exchange their tokens for Algorand.

 

Future Plans

Ethereum

Following the Merge, Ethereum plans more upgrades to further improve upon scalability and security and lower the platform’s carbon footprint. The next phase in the upgrade plan is referred to as “Sharding.” Sharding involves expanding Ethereum’s capacity to store data and work with L2s to lower network fees and scale throughput.

Sharding is set to be rolled out in multiple phases between 2023 and 2024.

Algorand

There aren’t many publications, such as roadmaps, on the Algorand blockchain and its future. According to developers, Algorand’s native currency ALGO is already fast and secure, but the Algorand Foundation has apparently outlined “serious plans” to transform the DeFi ecosystem.

Crypto analysts have also stated that the smart contract platform can see great advancements if its strategy to focus on institutional investors works according to plan.

Some go as far as describing Algorand as an Ethereum killer. However, several projects over the years have touted themselves as an Ethereum killer. Algorand is faster than Ethereum and doesn’t charge gas fees, so this may be seen as a good start.

 

FAQs

What is gas in cryptocurrency?

In crypto, gas refers to the unit that measures the amount of computing required to execute certain operations on the Ethereum network. Gas fees are, therefore, essentially the same thing as transaction fees.

What is a proof-of-stake model?

With the proof-of-stake model, cryptocurrency owners are able to stake coins and create their own validating node. Staking is pledging your coins to be used for certain transactions. For example, staking ETH means that you won’t be able to use it, as it will be locked up.

Validator nodes oversee staking and maintain the status of the blockchain.

Is the Ethereum Merge a good thing?

According to experts, the Merge could foster growth for Ethereum. This is primarily because the Merge could speed up transaction processing, provide improved security, and offer a 98 percent reduction in Ethereum’s energy consumption. Additionally, the Merge could result in related altcoins seeing price growth.

So, if all goes according to plan, the Merge could be a good thing.

What are L2s in crypto?

L2 or Layer 2 is a term used to define a set of Ethereum scaling solutions. Layer 2s is a blockchain that extends Ethereum while remaining separate from Ethereum but inheriting its security guarantees.

Is open finance the same as decentralized finance?

An open financial system increases convenience and access points to incumbent bank systems. On the other hand, a decentralized financial system primarily concerns itself with digital assets and developing financial products and services for the crypto economy.

 

Sources:

https://uk.finance.yahoo.com/news/ethereum-merge-up-150608770.html?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAAGU_rmgfmiBDequ8oKBp1Bc4BY1KqTTiAbNWlxE9xD0WS6HB21vabfOvRsFhlO63ENvOAHnupeqQcsK3qRE0pMFG8TEMJH7AW8iFkW_XRUum2aX-HoA61IY63Fmhh0-6CUoYxlPYfTmrBUZrqAFAjAnPb-RprTTm3e1OjvBe-X57

https://www.gemini.com/cryptopedia/open-vs-decentralized-finance-defi#:~:text=Open%20finance%20increases%20convenience%20and,for%20the%20new%20crypto%2Deconomy.

https://ethereum.org/en/layer-2/#:~:text=Layer%202%20(L2)%20is%20a,the%20security%20guarantees%20of%20Ethereum.

https://www.fool.com/investing/stock-market/market-sectors/financials/cryptocurrency-stocks/proof-of-stake/#:~:text=The%20proof%2Dof%2Dstake%20model,you%20want%20to%20trade%20them.

https://www.nasdaq.com/articles/algorand-has-serious-plans-to-transform-the-defi-sector

https://www.finder.com/za/how-to-buy-algorand

https://www.algorand.com/about/our-history